Advanced Search
MyIDEAS: Login

Is there complementarity or substitutability between internal and external R&D strategies?

Contents:

Author Info

  • Hagedoorn, John
  • Wang, Ning
Registered author(s):

    Abstract

    The various strands of extant empirical research are inconclusive about the complementarity or substitutability between different innovation mechanisms, such as internal and external R&D. Using a panel sample of 83 incumbent pharmaceutical firms covering the period 1986–2000, our empirical analysis suggests that, instead of a clear-cut answer to the question of whether internal and external R&D are complementary or substitutive innovation activities, there appears to be a contingent relationship between internal and external R&D strategies in shaping a firm's innovative output. The results from our study indicate that the level of in-house R&D investments, which is characterized by decreasing marginal returns, is a contingency variable that critically influences the association between internal and external R&D strategies. In particular, internal R&D and external R&D, through either R&D alliances or R&D acquisitions, are complementary innovation activities at higher levels of in-house R&D investments, whereas at lower levels of in-house R&D efforts, internal and external R&D turn out to be substitutive strategic options.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0048733312000558
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Research Policy.

    Volume (Year): 41 (2012)
    Issue (Month): 6 ()
    Pages: 1072-1083

    as in new window
    Handle: RePEc:eee:respol:v:41:y:2012:i:6:p:1072-1083

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/respol

    Related research

    Keywords: Complementarity; Substitutability; Internal R&D; External R&D; Innovative output; Pharmaceutical industry; Biotechnology patents;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Montalvo, Jose G, 1997. "GMM Estimation of Count-Panel-Data Models with Fixed Effects and Predetermined Instruments," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 82-89, January.
    2. Fidel Pérez Sebastián & Shiferaw Gurmu, 2007. "Patents, R&D And Lag Effects: Evidence From Flexible Methods For Count Panel Data On Manufacturing Firms," Working Papers. Serie AD 2007-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Wim Vanhaverbeke & Victor Gilsing & Bonnie Beerkens & Geert Duysters, 2009. "The Role of Alliance Network Redundancy in the Creation of Core and Non-core Technologies," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 215-244, 03.
    4. Catozzella, Alessandra & Vivarelli, Marco, 2007. "The Catalysing Role of In-House R&D in Fostering the Complementarity of Innovative Inputs," IZA Discussion Papers 3126, Institute for the Study of Labor (IZA).
    5. Colombo, Massimo G. & Grilli, Luca & Piva, Evila, 2006. "In search of complementary assets: The determinants of alliance formation of high-tech start-ups," Research Policy, Elsevier, vol. 35(8), pages 1166-1199, October.
    6. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    7. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
    8. Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
    9. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-79, June.
    10. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953.
    11. Hall, Andrew & Bockett, Geoffrey & Taylor, Sarah & Sivamohan, M. V. K . & Clark, Norman, 2001. "Why Research Partnerships Really Matter: Innovation Theory, Institutional Arrangements and Implications for Developing New Technology for the Poor," World Development, Elsevier, vol. 29(5), pages 783-797, May.
    12. Pennings, J.M. & Harianto, F., 1992. "Technological networking and innovation implementation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-382784, Tilburg University.
    13. van Kranenburg, H.L. (Hans) & Hagedoorn, John, 2008. "Strategic focus of incumbents in the European telecommunications industry: The cases of BT, Deutsche Telekom and KPN," Telecommunications Policy, Elsevier, vol. 32(2), pages 116-130, March.
    14. Dushnitsky, Gary & Lenox, Michael J., 2005. "When do incumbents learn from entrepreneurial ventures?: Corporate venture capital and investing firm innovation rates," Research Policy, Elsevier, vol. 34(5), pages 615-639, June.
    15. Scherer, F. M., 1983. "The propensity to patent," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 107-128, March.
    16. Jaider Vega-Jurado & Antonio Gutiérrez-Gracia & Ignacio Fernández-de-Lucio, 2009. "Does external knowledge sourcing matter for innovation? Evidence from the Spanish manufacturing industry," Industrial and Corporate Change, Oxford University Press, vol. 18(4), pages 637-670, August.
    17. Lokshin, Boris & Belderbos, René & Carree, Martin, 2007. "The Productivity Effects of Internal and External R&D: Evidence From a Dynamic Panel Data Model," MERIT Working Papers 026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    18. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
    19. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
    20. Teece, David J., 1982. "Towards an economic theory of the multiproduct firm," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 39-63, March.
    21. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
    22. Beneito, Pilar, 2006. "The innovative performance of in-house and contracted R&D in terms of patents and utility models," Research Policy, Elsevier, vol. 35(4), pages 502-517, May.
    23. repec:fth:harver:1473 is not listed on IDEAS
    24. Hagedoorn, John & Cloodt, Myriam, 2003. "Measuring innovative performance: is there an advantage in using multiple indicators?," Research Policy, Elsevier, vol. 32(8), pages 1365-1379, September.
    25. Thorwarth, Susanne & Kraft, Kornelius & Czarnitzki, Dirk, 2008. "The Knowledge Production of 'R' and 'D'," ZEW Discussion Papers 08-046, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    26. Richard Blundell & Rachel Griffith & Frank Windmeijer, 1999. "Individual effects and dynamics in count data models," IFS Working Papers W99/03, Institute for Fiscal Studies.
    27. Guo, Jie Q & Trivedi, Pravin K, 2002. " Flexible Parametric Models for Long-Tailed Patent Count Distributions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(1), pages 63-82, February.
    28. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January.
    29. Arora, Ashish & Gambardella, Alfonso, 1994. "Evaluating technological information and utilizing it : Scientific knowledge, technological capability, and external linkages in biotechnology," Journal of Economic Behavior & Organization, Elsevier, vol. 24(1), pages 91-114, June.
    30. Schmiedeberg, Claudia, 2008. "Complementarities of innovation activities: An empirical analysis of the German manufacturing sector," Research Policy, Elsevier, vol. 37(9), pages 1492-1503, October.
    31. Adam B. Jaffe & Manuel Trajtenberg, 1998. "International Knowledge Flows: Evidence from Patent Citations," NBER Working Papers 6507, National Bureau of Economic Research, Inc.
    32. Crepon, Bruno & Duguet, Emmanuel, 1997. "Estimating the Innovation Function from Patent Numbers: GMM on Count Panel Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 243-63, May-June.
    33. Richard Blundell & Rachel Griffith & John Van Reenen, 1994. "Dynamic count data models of technological innovation," IFS Working Papers W94/10, Institute for Fiscal Studies.
    34. Acs, Zoltan J & Audretsch, David B, 1989. "Patents as a Measure of Innovative Activity," Kyklos, Wiley Blackwell, vol. 42(2), pages 171-80.
    35. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    36. Teece, David J., 1992. "Competition, cooperation, and innovation : Organizational arrangements for regimes of rapid technological progress," Journal of Economic Behavior & Organization, Elsevier, vol. 18(1), pages 1-25, June.
    37. Colombo, Massimo G. & Garrone, Paola, 1996. "Technological cooperative agreements and firm's R & D intensity. A note on causality relations," Research Policy, Elsevier, vol. 25(6), pages 923-932, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Peeters, T.J.G., 2013. "External knowledge search and use in new product development," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5906731, Tilburg University.
    2. Spyros Arvanitis & Martin Wörter & Pierre Mohnen & Boris Lokshin, 2013. "Impact of external knowledge acquisition strategies on innovation – A comparative study based on Dutch and Swiss panel data," KOF Working papers 13-325, KOF Swiss Economic Institute, ETH Zurich.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:41:y:2012:i:6:p:1072-1083. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.